Just How Much Will the GM Bailout Cost Taxpayers?

Nick Gillespie | June 30, 2009

From the Wash Post, a warning not to count on cashing out that government-owned GM stock any time soon:

For the United States to fully recover its investment, the value of General Motors stock will have to reach levels it has never before attained....

"I don't know how much we're going to recover," a senior Obama administration official said as the company headed into bankruptcy last month.

This uncertainty stems from the difficulty in valuing the 60 percent GM stake that the United States will receive in exchange for the public investment. The government also gets preferred shares and other compensation.

The stake will be worth enough to fully cover the government's direct investment only if GM's stock rises above $68 billion. Even at its recent 2000 peak, GM's stock was worth only $56 billion.

And just so we're clear: "These calculations do not include the billions of dollars that the United States has put into GMAC, GM's financing arm, and into aiding auto suppliers." And just so we're even clearer about the visionary thinking that continues apace related to the producer of the mighty Aztek:

In announcing the government's intention to put another $30 billion into the company earlier this month, President Obama said, "We're making these investments not because I want to spend the American people's tax dollars, but because I want to protect them."

Whole story here.

Comments

|6.30.09 @ 9:42AM|#

"We're making these investments not because I want to spend the American people's tax dollars, but because I want to protect them."

Is he even trying anymore? This is like saying "Nobody's really listening anymore. I can just say something pithy and obfuscating and people will think it's insightful and all straight-shootery."

Xeones|6.30.09 @ 9:44AM|#

Shut the fuck up, Barack Obama.

Rich|6.30.09 @ 9:47AM|#

"We're making these investments not because I want to spend the American people's tax dollars, but because I want to protect them."

Protect them from *what*, exactly?

BakedPenguin|6.30.09 @ 9:51AM|#

"Protect them from *what*, exactly?"

The American people, of course.

|6.30.09 @ 9:51AM|#

Um....spending $30 billion to protect $68 billion? If your $68 billion is in so much trouble that you need to spend another half that amount to protect it, isn't that a sign you should cut your losses?

Dear Chosen One, in your extensive studies of every topic in the universe, something may have slipped past even a mind as great as yours. Therefore, I respectfully suggest you google the term "sunk cost".

|6.30.09 @ 9:52AM|#

"Nobody's really listening anymore. I can just say something pithy and obfuscating and people will think it's insightful and all straight-shootery."

This is all Obama has ever done. His only virtue was he was not Bush, not that Bush ran for prez in 2008.

Got to hand it to Obama, he is the only possible person that in contrast makes Jimmy Carter and Hillary Clinton look good better less bad.

|6.30.09 @ 9:53AM|#

The stake will be worth enough to fully cover the government's direct investment only if GM's stock rises above $68 billion.

I suspect this claim incorporates the outlandish assumption that "we" are done pounding cash into this particular rathole.

|6.30.09 @ 9:54AM|#

...GMAC, GM's financing arm...

Are GM and GMAC even related anymore? I thought the two were split years ago and are not even related at the highest board room level. I might be wrong.

stuartl|6.30.09 @ 9:59AM|#

"We're making these investments not because I want to spend the American people's tax dollars, but because I want to protect them."

Sounds like no one ever told Obama the first rule of investing my father taught me -- don't throw good money after bad.

Rich|6.30.09 @ 10:00AM|#

> I respectfully suggest you google the term "sunk cost".

Didn't the Soviets have trouble with this concept, insisting the US reimburse them for useless nukes? Guess *I* better Google that ...

--^--^--|6.30.09 @ 10:02AM|#

cut your losses

That is not a concept our overlords understand.

|6.30.09 @ 10:04AM|#

The entire continued existence of the government is a massive Sunk Cost Fallacy carefully bespattered with pseudo-Leibnizean "best of all possible governments" claptrap.

Alan Vanneman|6.30.09 @ 10:06AM|#

"We're making these investments not because I want to spend the American people's tax dollars, but because I want to protect them."

In addition, War Is Peace,Preventive Detention Is Freedom, and Darkness Is Light. So stop complaining, guys, and get ready for Hate Week.

Ben|6.30.09 @ 10:08AM|#

This corporate welfare should be ended, and GM should be turned over to the workers and run as a Worker's Syndicate.

|6.30.09 @ 10:09AM|#

When is he going to throw the UAW under the bus?

|6.30.09 @ 10:10AM|#

CoyoteBlue

Christopher Moore fan?

|6.30.09 @ 10:17AM|#

Where's the Honduran military when you need them?

Spartacus|6.30.09 @ 10:24AM|#

Whenever a Democrat politician uses the word "investment," my sphincter reflexively tightens up.

creech|6.30.09 @ 10:27AM|#

Madoff was a piker compared to these guys. And he got 150 years. What will these guys get? [Awards, kudos, re-elections, millions for memoirs, a spot on Mt. Rushmore.]

Russ 2000|6.30.09 @ 10:37AM|#

Therefore, I respectfully suggest you google the term "sunk cost".

At this point, Obama is a sunk cost.

Naga Sadow|6.30.09 @ 10:51AM|#

Yo! Fuck Obama Motors!

Inspired by Xeones.

Oh and "straight shootery"? WIN!!!

|6.30.09 @ 10:51AM|#

"We're making these investments not because I want to spend the American people's tax dollars, but because I want to protect them."

Protect them from *what*, exactly?

NO,no,no,no, you are off the track completely,it's not 'what' that is ambiguous, it is the 'them', and 'them' ain't the 'people' but of course his union cronies.

hmm|6.30.09 @ 11:17AM|#

I wonder if Obama is going to bailout Transformers. It is a showcase for GM products and a miserable failure like GM.

In all seriousness I wonder if Toyota, Honda, and Ford are planning to start production of vehicles that GM and Dodge won't be able to make due to their deal with satan. I also can't wait until Ford sues for having to compete with the government to sell cars, along with the trade issues that will most likely arise with Japan.

JB|6.30.09 @ 11:46AM|#

Obama is one stupid, stupid fuck.

hammeredHead|6.30.09 @ 11:53AM|#

Lighten up, the man just isn't that bright.

Abner MacGillicuddy|6.30.09 @ 12:10PM|#

This corporate welfare should be ended, and GM should be turned over to the workers and run as a Worker's Syndicate.

The "Workers" aren't interested in running General Motors they want to milk it.

And turned over by whom exactly? And what "Corporate Welfare"? The "corporate capitalists", ie the shareholders and the secured creditors aren't getting shit in this, they've been dispossessed.

|6.30.09 @ 12:20PM|#

In all seriousness I wonder if Toyota, Honda, and Ford are planning to start production of vehicles that GM and Dodge won't be able to make due to their deal with satan.

I want Honda to make a proper rear-wheel/FWD, body on frame, pick-up truck with at least a 5000lb towing capacity. I'd buy that.

After driving the GF's 2007 Civic around, whenever I need a new car it will be nearly one-stop shopping. The only comparison I am likely to do is o compare the price between different Honda dealers. Fuck the UAW.

|6.30.09 @ 12:39PM|#

"I don't know how much we're going to recover," a senior Obama administration official said as the company headed into bankruptcy last month.

Let me help you out there, sparky. The word you're looking for is "squat".

-jcr

Paul|6.30.09 @ 12:48PM|#

Dear Chosen One, in your extensive studies of every topic in the universe, something may have slipped past even a mind as great as yours. Therefore, I respectfully suggest you google the term "sunk cost".

DOUBLE DOWN! DOUBLE DOWN!

|6.30.09 @ 12:48PM|#

"We're making these investments not because I want to spend the American people's tax dollars, but because I want to protect them."

Um... "I've abandoned free-market principles to save the free-market system,"

I thought we were done with Bush... Obama's just another politician. Don't try to tell us that he's anything special or revolutionary.

Ska|6.30.09 @ 12:55PM|#

Whenever a Democrat politician uses the word "investment," my sphincter reflexively tightens up.

You must be looking to get more tissue damage than the rest of us.

Ben|6.30.09 @ 12:58PM|#

I speak of the CEO and board of GM.

But in a way, you're right. They're trading servitude to the capitalist for servitude to the state, and both kinds of servitude and exploitation are bad.

|6.30.09 @ 1:18PM|#

I want to protect them.

I bet that muggers all over the country will be using that line now. "Let me protect your money".

-jcr

Don Corleone|6.30.09 @ 1:22PM|#

We've been protecting other people's interests for centuries, John.

|6.30.09 @ 2:02PM|#

"But in a way, you're right. They're trading servitude to the capitalist for servitude to the state, and both kinds of servitude and exploitation are bad."

Perhaps, but only one of these can use force to get you to comply when you'd rather not. No small detail, no?

|6.30.09 @ 2:14PM|#

doubled,

No, see, you missed the whole part about "economic coercion." If you have one dollar and I have two dollars, that extra dollar of mine is just like a loaded gun pointed right at your head.

A slightly richer neighbor and a fully armed SWAT team are the exact same thing.

|6.30.09 @ 2:17PM|#

Meanwhile

Ford last increased quarterly production in late 2007. This increase is also the second time Ford has upped its third-quarter production plans.

The company now plans to produce 485,000 vehicles in the third quarter, or 16% more vehicles than it produced last year during the same period.

"We do see the light at the end of the tunnel," said George Pipas, Ford's top sales analyst.

Ford - the only domestic automaker to not file for bankruptcy - is poised to ride the upturn. Ford expects to gain retail market share in June, as it has in eight of the last nine months. [italics added]

How well would they be doing if GM and Chrysler weren't being propped up by the governmant? I've said it before, Ford Motor is getting screwed by the Bushama bailout of companies that should be parted out.

|6.30.09 @ 2:46PM|#

j sub d says : "How well would they (Ford motors) be doing if GM and Chrysler weren't being propped up by the governmant? I've said it before, Ford Motor is getting screwed by the Bushama bailout of companies that should be parted out."
To steal from Inigo: I think fair doesn't mean what you think it means.
But , not suprising in the least. The whole subprime, banking fiasco is also about propping up (rewarding) those who were unprudent with their capital and failed with the treasure of those who were prudent and succeeded.

Socialism is a philosophy of failure, the creed of ignorance, and the gospel of envy, its inherent virtue is the equal sharing of misery. - Winston Churchill

|6.30.09 @ 3:10PM|#

GM is only interested in recieving TARP funds, etc. it no longer cares about building cars, as aslong as the billions keep coming from the taxpayer, why even build a car. We pay to have the workers sit at home all summer a near full pay, we pay to have lobbyiest lobby for more funds. we pay for the DIP, we pay for GM not to build cars, we pay to keep plants open, which do not build cars, we pay billions, yet GM has only build one car in the last 6 months. Guessing how much it will cost when they actual start building cars, going to be stupid billions. Please let the firm go away, and a different firm build fronm the base up.

ChrisO|6.30.09 @ 3:32PM|#

I wonder if Obama is going to bailout Transformers. It is a showcase for GM products and a miserable failure like GM.

Transformers is making money. Lots of it. Maybe GM ought to go into the film business, since they obviously have to aptitude for the car business anymore.

Mike|6.30.09 @ 4:33PM|#

GM is going to be like the airline companies. They'll get gobs of money every few years, and declare bankruptcy every 15 years. It will be a zombie company, the walking dead.